4. Which of the following statements are correct concerning a flexible short-ter

Question

4. Which of the following statements are correct concerning a flexible short-term financial policy? A flexible policy is most appropriate when carrying costs are low relative to shortage costs. A flexible policy entails the use of maintenance of large cash balances. A flexible policy is associated with low costs of not having enough inventory on hand The optimal current asset holdings are higher under a flexible policy than under a restrictive policy I and Il only b. 1 and III only c. Il and III only I1 and IV only III. IV. a. d. e. 1., and IV only

Explanation / Answer

the correct option should be (e) I,II, and IV only.

Flexible short term fianancial policy includes -

Enough cash

Large inventory

Liberal credit terms

flexible policy is appropriate when carrying cost of inventory is low because in this policy firm has high inventory.

that's why these three option seems fit.

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